East New York

When the Nehemiah project launched in the 1980s, it sold houses to residents of East New York for as little as $39,000. The church-run program would buy abandoned, city-owned properties and erect inexpensive homes for residents that met the program’s strict financial credibility checks. Nowadays, Nehemiah (named after the post-exile Biblical character who rebuilt Jerusalem) homes sell for as much as $120,000, but this is still well below market rates for similar properties. NPR profiled the organization this week, pointing out that the project has stringent financial checks to ensure that applicants are not involved in any criminal activity and to ensure that they will not default on their mortgages (applicants can spend no more than 20 percent of their income on the mortgage; no more than ten out of over 4,000 homes have been foreclosed in the program’s entire history). Zandra Brockman, an applicant to the program, said the application process was worth the result: “Where else could we live at the prices we had?” she told NPR. “It was truly a blessing for us.” The article adds that applicants who are rejected often organize their finances and re-apply later successfully. Sarah Plowden, who works for Nehemiah and also owns a home through the program, said: “We more than just bought homes. We bought into one another as a people.”
Low-Cost Brooklyn Housing Sees Few Foreclosures [NPR]
Affordable Houses Infused With Color [NY Times]
Low-Income? You’re Kidding! [NY Magazine]

Hudson Companies (yes, they of the Third & Bond blog) announced that ground was broken yesterday at the eight-story low-income housing development at 1490 Dumont Avenue in East New York. The 176 rental apartments, made possible by the LAMP program and several city agencies, will be available to households with incomes of $16,000 to $46,000, with 20 percent of the units reserved for formerly homeless tenants. The project (called the Elder Lane development) will include solar panels, bicycle and car parking, and a 6,000-square-foot enclosed, landscaped courtyard. It will also be “the first residential project in NYC to utilize a vibro-compaction system,” which, as the name implies, uses vibrations to rearrange the soil, making it more dense and less permeable. According to the press release, this saved the project $1.5 million because “the procedure eliminates the need for 50′ piles, as well as structural caps, beams, and slabs.” 1490 Dumont is being launched as part of Mayor Bloomberg’s New Housing Marketplace Plan, which hopes to preserve or construct 165,000 units of affordable housing by 2014. GMAP

Many tenants at an East New York housing complex have been evicted or forced to move because their rents have gone through the roof, reports the Daily News. Rents at Linden Plaza, a five-building Mitchell-Lama development with 319 residential units, have gone up by $300 so far in the past year or so, and will increase again next year so that the price for a one-bedroom will have gone from $664 to $1,132. The increases are paying for a capital improvements program at the complex. Some of the disgruntled tenants were counting on Section 8 vouchers to cover the increase but claim that bureaucratic delays thwarted them. Bob Vaccarello, president of RY Management, which oversees Linden Plaza, said that “anybody who was eligible did get a voucher,” adding that some tenants simply missed deadlines or failed to provide enough information. A city spokesman said that the rents are lower than what residents would pay if the owners left the Mitchell-Lama subsidy program, but this is a cold comfort to some. The Daily News spoke with tenant Carol Thompson, 53, who lost her job last year and has received no word regarding her voucher application. She has borrowed money from relatives to make rent, but doesn’t know what to do in the long term. “I just can’t afford it,” she said. “They’re sucking people dry.” GMAP P*Shark
Rent Hike Shocks Tenants [NY Daily News]
Image from PropertyShark

Earlier this summer, The Real Deal noted that during the slow market, some real-estate brokers have been bailing on market-rate condos and spending their time trying to move units in affordable housing developments with government-backed financing for first-time buyers. One such development, the MeadowWood at Gateway in East New York/Lindenwood (a complex of 19 buildings built in the 1960s formerly known as Fairfield Towers), is targeted towards middle-income buyers such as teachers, nurses, or police officers, with 1,142 one- to three-bedroom units priced between $110,000 and $349,000. The Real Deal also reported that “MeadowWood is one of several affordable housing developments that operates under a partnership between HPD and an organization called Neighborhood Housing Services. The program offers consumer loans through the State of New York Mortgage Agency program, which offers 30-year fixed-rate loans for up to 97 percent of the property’s value, based on strict income and credit guidelines.” In an announcement that’s sure to make market-rate marketers cringe, Filmore Real Estate, the building’s sales agent, just announced in a press release that over 60 units have gone into contract since January while prices, which rose in 2008, remained stable this year. GMAP

Crain’s and the Times have the latest word on the sale of Starrett City, the massive East New York affordable housing complex. The 5,881-unit property’s owners have narrowed down the field of bidders to four, and the price tag is expected to be between $800 and $900 million, making it one of the biggest real estate deals of the year. Aside from affordable housing groups and nonprofits, some of the names among the four teams whose offers are being considered include the Related Companies, Westbrook Partners, and the Clarrett Group. One of the more interesting facets of the deal is that bidders are examining whether it’ll be possible for them to build additional housing and/or stores at Starrett. Per Crain’s, some of the groups are looking to build up to 1,000 additional affordable housing units.
Four Finalists selected for Starrett City [Crain's]
Four Groups Invited to Make Final Bids for Starrett City [NY Times]
Photo by ntang.

What’s likely to be the biggest real estate deal in Brooklyn this year is starting to take shape. There are now seven confirmed bidders for Starrett City, the massive East New York affordable housing complex, according to Crain’s: The Bluestone Group, Christian Cultural Center coalition, Enterprise Community Partners, L+M Development Partners, The New York Housing Partnership, and Omni New York. The deadline for bids is July 8th, and they’re expected to range from $600 million to $1 billion. Omni is headed by ex-Met slugger Mo Vaughn and has other investments in East New York; L+M Equity’s many affordable projects in Brooklyn include redeveloping Wallabout’s Brig and building the affordable component at Williamsburg’s Schaefer Landing; the Christan Cultural Group is a local church with 29,000 members; and Bluestone is part of the team developing the Public Place property in Gowanus. After July 8th, Starrett City’s current owners are going to narrow the field of bidders to two or three finalists and consult with local, state, and government officials in order to choose a winner.
Seven Groups Ready Bids for Starrett City [Crain's]
Photo by gkjarvis.

A deal between Starrett City’s current owners and state, city, and federal officials will ensure that the 5,881-apartment complex in East New York remains affordable, according to the Times. The agreement will work, in the main, by covering most Starrett units under the Section 8 program for a 20-year term. The property is about to go back on the market. Federal officials blocked Starrett’s sale last year on the grounds that the winning bid for the complex, $1.3 billion c/o a group of investors led by David Bistricer, was too high for the would-be owners to maintain affordability. Stareett City is made up of 46 towers and 140 acres, and it is the largest federally subsidized housing complex. The new sale of Starrett is expected to draw bids between $600 million and $800 million, and the city will help the winning bidder gain approval to build new retail and housing on the site. Tenant advocate Bertha Lewis of Acorn called the plan “a model agreement” because it could influence how other subsidized housing complexes are sold off.
In New Sale, Starrett City Would Stay Affordable [NY Times]
Starrett City Measure Wending Through Congress [Brownstoner]
New Starrett City Bids Coming In [Brownstoner]
Photo by ntang.

A bill that would preserve affordability at Starrett City, the largest federally subsidized rental complex in the United States, was overwhelmingly approved in the House last week. The bill was introduced by Rep. Edolphus Towns and co-sponsored by Rep. Nydia Velázquez. East New York’s Starrett City has 5,800 units and 14,000 residents, and the government wouldn’t allow its current owners to sell the property to a group of investors who bid $1.3 billion for it last year because it was believed that the high sales price meant the housing stock wouldn’t be kept affordable. The bill converts Section 8 and Rental Assistance Program (RAP) contracts at Starrett to a project-based Section 8 contract, which ensures longer-term affordability for those particular units. (We’re not clear on whether this applies to all the massive complex’s units or just some of them.) According to an article in the Eagle, the measure “creates the conditions necessary for purchasers of Starrett City to secure the long-term financing necessary to purchase the property, therefore allowing them to keep the units affordable.” As of late last week, the bill was set to become an amendment in one of the foreclosure-relief bills currently being considered by the House. It wasn’t, however, amended to the controversial anti-foreclosure bill that passed last week and that President Bush has vowed to veto.
Rep. Towns’ Press Release on Starrett Bill [house.gov]
Starrett Bill [govtrack.us]
Reps. Towns, Velázquez Report Success for Starrett City [Brooklyn Eagle]
Photo by ntang.

Crain’s reports there are now four potential buyers for Starrett City, the 46-building, East New York Mitchell-Lama complex. The National Housing Partnership Foundation and the New York Housing Partnership are both interested in purchasing the complex, joining two other would-be bidders, a coalition of religious and community groups and the National Development Council. Starrett City’s owners have not yet officially put the complex on the market, but it is believed that when all’s said and done the price tag will be well below the $1.3 billion offered by Clipper Equities last year. Clipper’s bid was rejected after activists and politicians protested the deal, saying there was no way the bidder could be willing to shell out so much money and still keep the 5,800-unit property affordable. The nonprofit and grassroots credentials most of the current potential bidders bring with them likely means all or most will pledge to keep Starrett’s affordability intact.
List of Starrett City Bidders Grows to Four [Crain's]
Closing Bell: New Starrett City Bids Coming In [Brownstoner]
Starrett photo from forrent.com